DUBAI'S PORT RASHID CLOSING TO MAKE WAY FOR DEVELOPMENT

UNCLAS SECTION 01 OF 02 DUBAI 000108 SIPDIS SIPDIS DEPARTMENT: NEA/ARPI BAGWELL AND MASILKO E.O. 12958 TAGS: ECON EINV SENV PGOV AE SUBJECT: DUBAI'S PORT RASHID CLOSING TO MAKE WAY FOR DEVELOPMENT DUBAI 00000108 001.2 OF 002 ¶1. (SBU) Summary. In a move aimed at maximizing financial returns on prime central Dubai real estate, Dubai government-controlled port operator DPWorld announced that Dubai's historic Port Rashid will be closed to cargo, commercial and military sea traffic in stages over the next few months, with most operations moving to the flagship Jebel Ali port (approximately 20 KM south of Port Rashid). US and Coalition naval vessels will be able to use the port until August. The closure has placed some Coalition forces in a difficult position vis-a-vis berth space, with DPWorld sending out feelers on having Coalition forces share some of the dedicated USN berth space at Jebel Ali. Replacing Port Rashid will be yet another major land reclamation effort: Maritime City, which will also include a large cruise terminal. End Summary Port Rashid closing to commercial and military traffic -------------- -------------- ¶2. (SBU) During a late February meeting with US Navy Commander Task Force 53 Port Liaison Element (CTF53 PLE) and Fleet Industrial Supply Center (FISC) Dubai Site, Tariq bin Khalifa (DP World Commercial Director, UAE Region) noted that Dubai's historic Port Rashid - the UAE's first fully modern port - would close to all commercial ships on 1 March 2008. Captain Nasser al Sabt (Jebel Ali Harbor Master) also noted that the Port would close to all shipping effective 1 August 2008. Some Coalition countries, including Britain, Japan and Canada, whose warships have periodically used Port Rashid, are now being forced to look for alternative locations. Smaller US vessels have also regularly berthed at Port Rashid. On behalf of the displaced British Coalition forces, Khalifa approached CTF53 with possibility of sharing USG leased Jebel Ali pier space. The Canadian and Australian Navy Contingent have also directly expressed to CTF53 their desire to berth in USG leased berth spaces at Jebel Ali. (Note. US Navy Regional Command currently pays DPWorld USD 1.3 million annually for priority pier space at Jebel Ali's Shed 66 and an additional 1.3 million for land lease and pier space at Quay Nine. End note). We understand Naval Central Command is considering the possibility. What stays at Port Rashid? -------------- ¶3. (U) While most operations now in Port Rashid will be moved to Jebel Ali, according to recent press, the current cruise terminal will be expanded to cater to growing numbers of cruise ship tourists (thus building on Dubai's efforts to become a vacation destination). Also heavily-used DPWorld dry dock operations will remain at Port Rashid, particularly as they would be prohibitively expensive to move. In addition, the business offices of Dubai Customs will remain in the downtown port. What's next for Port Rashid? -------------- ¶4. (U) Port Rashid lies at the entrance to the Dubai Creek, between Deira, the older commercial hub, and the still to be completed Deira Palm Island. Nakheel's redevelopment plans for "Maritime City" involve land reclamation for residential buildings, office towers, retail facility and a recreational marina. Reclamation estimates place the total site at 73 million square feet, more than three times the existing land mass. Comment -------------- ¶5. (SBU) The closing of Port Rashid to commercial and military sea traffic is one part of an evolving series of events impacting U.S. Navy port operations in Dubai. Currently, the U.S. Navy moors U.S. (Warships) and U.S.N.S. (Support Ships) at Port Rashid and Jebel Ali's Shed 66 and Quay Nine. In addition, DPWorld is constructing on a "build to lease" basis a new logistics transshipment point at Quay Nine for the exclusive use of the U.S Navy. Once completed, the U.S. Navy will eventually move from its present location at Shed 66 to Quay Nine; losing access to Shed 66, and more importantly, to its adjacent pier DUBAI 00000108 002.2 OF 002 space (resulting in a net estimated loss of 170 meters of pier space). The effect of this evolving situation is that as Port Rashid closes to all traffic, both commercial and military sea traffic will be pushed to Jebel Ali where there is already significant ship traffic and increasingly limited berth spaces. The U.S. Navy's ability to support Coalition and other forces by sharing pier space will be impacted by the net loss of space available at Jebel Ali. ¶6. (SBU) Dubai has made a major industry of land reclamation. With a coast line of a mere 70 kilometers, Dubai has projects both under construction and planning phases that would increase the coast line more than ten fold (to roughly 1,000 kilometers). All of these efforts accentuate Dubai's determination to build and expand on its already well-established tourism and real estate development sectors. SUTPHIN